U buying the PS5?

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if you go by standard retail behaviour in the uk, the rrp of the product would cost 1.8 times the cost of making the product (including labour), thereby resulting in a 50% profit as rrp includes 20% vat. considering the ps5 supposed costs $450 to make (~£343), that means in theory the console would logically retail for ~£618. however considering both companies obviously want to attract gamers / consumers, dont be too surprised, like you said, for them sell it at £500 range. it does however make me wonder why there is such a massive markup on premium smartphones as the phones themselves cost £200-£400 to make yet they retail for close to £1000 (if not higher) :colonhash:

The consoles themselves are a little different in that they can still afford to be loss leaders, taking smaller cuts of profit on the initial sale which they will then recoup over the course of its lifetime with online multiplayer subscriptions their cut of game sales. This year it's just going to have a lot more emphasis on the word "loss" :ahee:

As for smartphones, the answer's been pretty clear for at least the last five years- it's to push people towards multi-year contracts as hard as they can. £1200 a month for a new iPhone or Galaxy Note sounds obscene, so £65 per month for two years with a £100 upfront charge suddenly sounds downright reasonable. It's even worse in the US, prices are obscene.

Reply 41

quasa

Entertainment Forum Helper

at least stateside they offer bogof on new smartphones (including flagships), whereas uk they dont :frown:

(bogof = buy one get one free).
£65 a month is still too expensive imo and glad im only paying £15 a month (including insurance) for my pixel 3a (I paid around £300 upfront however)

but yeah, i remember ps3s were sold at a loss when they were new, so wouldnt be surprised to see them, like you said, take smaller revenue on hardware and make it up via subscriptions and game sales

(edited 3 years ago)

Reply 42

username612415

Original post by quasa

at least stateside they offer bogof on new smartphones (including flagships), whereas uk they dont :frown:

. £65 is still too expensive and glad im only paying £15 a month (including insurance) for my pixel 3a (I paid around £300 upfront however)

Yeah it's way too much, but a phone plan is a relatively simple calculation- they need to recoup the retail value of the phone and the sim plan, plus a little extra profit. So if you pick a cheap phone, you can get a cheap overall plan. In the US, however, there is a floor on how cheap they will give you a phone plan. Like on AT&T's site now if you wanted to get the cheapest phone available, for example a £120ish phone like the Galaxy A11 (the cheapest I can see right now), the cheapest available sim plan is $50 per month for 3GB. You can pay $65 for unlimited data, but the first line of the plan description is telling you they're allowed to throttle you arbitrarily. Even if you pay for their most expensive plan at $85 per month, they're still going to throttle you if you use over 100GB. I was shopping around for plans when I was there for a few months with work last year, it's utterly warped.

Reply 43

quasa

Entertainment Forum Helper

yikes, definitely sounds bad. do they do PAYG stateside?

Reply 44

username612415

Original post by quasa

yikes, definitely sounds bad. do they do PAYG stateside?

Yep, it's nuts. For pricier phones the sim plans are exactly the same but you have to pay a monthly cost for the phone on top of that. It's like O2 Refresh, except instead of splitting the cost of the contract reasonably between the handset and sim plans to allow for smoother upgrades, they're just gouging you twice. And they can get away with it because selling handsets unlocked is still not super common (and, as you originally noted, prices are insanely inflated) and if they're going to gimp you on the sim-only plan anyway then you may as well just get the full contract.

(edited 3 years ago)

Reply 45

ANM775

Original post by quasa

Analysts are saying they think both companies are aiming to release their consoles under the £$500 mark.

Also at the start consoles are typically sold at somewhat of a loss and the companies recoup the losses through games sales.

I would bet money on the ps5 retailing for between £399.99 and £499.99 on release